Student loans get a bad rap most of the time, but they are not necessarily evil. The student loan industry was formed with noble intentions—to make college a possibility for all, regardless of circumstances. For first-generation or low-income students, loans were a ticket to a valuable degree and a secure financial future. Today, student loans still help millions get an education they otherwise wouldn’t be able to afford, making them eligible for higher paying careers. Increasingly, bachelor’s degrees or higher are needed to get jobs that pay a decent wage, so student loans can help bridge the gap. If handled wisely, loans can be a useful tool in creating a strong future.

When Did Student Loans Begin?

The first student loans offered by the federal government became available in the 1950’s under the National Defense Education Act, which was put in place to encourage more people to pursue careers in math and science during the competitive era with Russia. For the first time, a college education was seen as a necessity, rather than a luxury for a distinct few. After World War II and the introduction of the GI Bill, veterans pursued degrees as a way to transition successfully into the civilian workplace after their years of military service.

People began to enroll in college programs in unprecedented numbers; the number of college graduates in 1940 was just 186,000 in the entire country. After the introduction of federal student loans, that number exploded. By 1970, over 800,000 people graduated from college each year.

As the demand for a college education increased, so did the cost of tuition. A degree that cost $450 in 1940 cost over $9,000 in 1980, outpacing the rate of inflation. Each year, tuition and the cost of room and board continued to increase, sometimes dramatically. Part of the problem was the government’s role in student loans; they gave out loans easily, contributing to higher tuition and flooding the market with more college graduates. Jobs that previously paid very well now had hundreds of applicants, so salaries dropped too.

Today, the Department of Education has the third-largest discretionary budget of any department, following the Departments of Defense and Department of Health and Human Services. Loans continue to be granted in large numbers, and tuition costs continue to increase as well. Currently, there is $1.3 trillion in student loan debt within the United States.

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But It’s All Worth It

Student loans can be burdensome; there’s no getting around it, but they’re worth it. A college degree can lead to prosperity and security in a way a high school diploma cannot. Studies have shown that people with a bachelor’s degree make 84 percent more over a lifetime than those with only a high school diploma. In real numbers, that means a college degree is worth more than $2.8 million on average, and the difference in lifetime earnings between those with a degree and those without is over $1 million.

It’s estimated that by the year 2018, over 63 percent of American jobs will require a post-secondary degree, making it difficult for those with a high school diploma to get a well-paying job that can sustain them and their families. Today, just 40 percent of adults have a bachelor’s degree, meaning a significant portion of the population will struggle to get jobs that can adequately support them. A college degree is more necessary than ever before, meaning more people will need to take out student loans to ensure solid career opportunities.

The best student loans can be tools for success if used wisely. By attending state schools, working part-time to offset college costs or attending community college before transferring to a four-year school, you can take out a minimum amount of debt and get the degree you need for your field. With federal loans, interest rates are lower than they have been in the past, and with private refinancing, you can drop your interest rates or your monthly payments to make the debt more manageable.

Despite the reputation of student loans, they are a necessity for a college degree and a good job. By understanding the terms of student loans, your debt options and refinancing and repayment opportunities, you can minimize your debt load while paving the way for a secure financial future.